F-35 FLEET GROUNDED: The Air Force and the Navy grounded the F-35 fleet, based on initial findings from a runway fire incident that occurred last month at Eglin Air Force Base, the Pentagon announced late Thursday, ahead of the three-day holiday weekend. The Defense Department said the "root cause" of the incident remains under investigation and additional inspections of the aircraft's engines have been ordered.

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THE BIG QUESTION — WILL F-35 GET TO THE U.K.?: The F-35 was slated to first appear this month at two British airshows: the Farnborough Airshow and the Royal International Air Tattoo. But those plans are now in doubt. “Preparations continue for F-35 participation in international air shows in the United Kingdom,” but a final decision won’t be made until early this week, Pentagon press secretary Rear Adm. John Kirby said in the statement.

The latest hitch for the Pentagon’s largest weapons program is also a setback for the F-35’s engine-maker, Pratt and Whitney, and its prime contractor, Lockheed Martin. Lockheed said in a statement it is “working closely with the F-35 Joint Program Office and industry partners in supporting the AF investigation. Safety is our team's top priority. Any further questions should be directed to the Joint Program Office."

TOP TALKER — CAUGHT UP IN THE NSA NET, via The Washington Post: “Ordinary Internet users, American and non-American alike, far outnumber legally targeted foreigners in the communications intercepted by the National Security Agency from U.S. digital networks, according to a four-month investigation by The Washington Post. Nine of 10 account holders found in a large cache of intercepted conversations, which former NSA contractor Edward Snowden provided in full to The Post, were not the intended surveillance targets but were caught in a net the agency had cast for somebody else.

“Among the most valuable contents — which The Post will not describe in detail, to avoid interfering with ongoing operations — are fresh revelations about a secret overseas nuclear project, double-dealing by an ostensible ally, a military calamity that befell an unfriendly power, and the identities of aggressive intruders into U.S. computer networks.

“Many other files, described as useless by the analysts but nonetheless retained, have a startlingly intimate, even voyeuristic quality. They tell stories of love and heartbreak, illicit sexual liaisons, mental-health crises, political and religious conversions, financial anxieties and disappointed hopes.” http://wapo.st/1m71gxu

LEVIN IN AFGHANISTAN — HELPING PUSH FOR ELECTION AUDIT: “A growing number of Western officials are calling for an audit of the ballots cast in the Afghan presidential election, increasing the likelihood that the nation’s electoral commission will have to formally reassess the June 14 runoff vote even as it prepares to announce preliminary results,” reports The New York Times.

“The most recent voice was that of Sen. Carl Levin, Democrat of Michigan, who spoke to reporters in Kabul on Sunday. Joined by the American ambassador, James B. Cunningham, Mr. Levin raised the prospect of a dual announcement on Monday, in which Afghan officials would both release preliminary results and announce an audit that would be satisfactory to both candidates.” http://nyti.ms/1m786mP

IT’S MONDAY, AND WELCOME TO MORNING DEFENSE, where we hope everyone enjoyed the long Fourth of July weekend with barbecues and fireworks (and some soccer, too). Austin is back tomorrow. Email tips, pitches and suggestions to jherb@politico.com and awright@politico.com, and follow us on twitter at @ jeremyherb, @ abwrig and @ morningdefense.

PUBLIC EYE — ISLAMIC STATE LEADER ALLEGEDLY ON VIDEO: “A man claiming to be the self-appointed caliph of the Islamic State jihadist group made what is thought to be his first taped appearance in a video that circulated on social media Saturday,” reports The Wall Street Journal.

“But Mr. Baghdadi's appearance in the high-quality video, in which he demanded that Muslims swear allegiance to his recently announced caliphate, looked set to further strengthen the jihadist bona fides of a militant leader whose power, popularity and strength have already eclipsed that of older militant groups such as al Qaeda. The speech also served as a rebuke to critics, many of them fellow Islamists who have criticized Mr. Baghdadi's aspirations to rule over the Islamic world while remaining in hiding.” http://on.wsj.com/1m75mFX

ENGILITY CEO SAYS LOW-COST CONTRACTING MODEL WORKS, via our colleague Leigh Munsil: “Government contractor Engility has shaken up services contracting with its low-cost model — but two years in, the company is now under pressure to prove that it can boost its sales and profit. … Engility was spun off from L-3 Communications and designed for a low-cost market, particularly one in which contracts were being awarded to “lowest-priced, technically acceptable” bids.

“Those proposals don’t necessarily represent the best value, but instead simply the lowest cost that meets the contract’s requirements.” … Engility’s moves have changed the industry, consultants say, but it remains a tough market. Indeed, the company’s 2013 sales fell nearly 10 percent from its 2012 revenue. In its most recent quarter, sales and profit declined. The full story, for pros: http://politico.pro/1m74fpD

WEEK AHEAD — CONGRESS IS BACK: The House and Senate are both back this week, the first of four straight weeks the two chambers are expected to be in session before the month-long August recess. It’s also likely to be the last significant chunk of time Congress meets before the midterm elections and a potential lame-duck session at the end of the year.

The biggest question for defense watchers is the Senate’s defense authorization bill, which Armed Services Chairman Carl Levin wants to get done before November. Finishing up that early is something that hasn’t happened in several years. Levin has not yet received any assurances yet from Majority Leader Harry Reid (D-Nev.) that this year will break the trend — but Levin and Oklahoma Sen. Jim Inhofe, the panel’s top Republican, are trying to jumpstart things by getting amendments together now.

The Senate Appropriations Committee will also take up its defense spending bill this month, with a markup set for July 17. But it’s not clear whether the defense measure will get to the Senate floor, as the upper chamber is once again running into amendment problems with other spending bills.

HAGEL AND DEMPSEY TO TALK IRAQ: On Tuesday, Defense Secretary Chuck Hagel and Joint Chiefs Chairman Gen. Martin Dempsey head to Capitol Hill for a Senate Armed Services classified briefing on Iraq and Afghanistan. While there’ll surely be some discussion of the Afghanistan drawdown, the two top Pentagon officials are likely to face many more questions about the gains made in Iraq by the Islamic State and the nearly 800 U.S. troops now authorized to enter the country.

TODAY — NATO SECRETARY GENERAL SPEECH: NATO Secretary General Anders Fogh Rasmussen is speaking at the Atlantic Council at 5 p.m. at an event titled “NATO Looking Forward: The Alliance in the Contested 21st Century.” On Tuesday, Rasmussen heads to the White House to meet with President Barack Obama.

ALSO THIS WEEK: The Senate Armed Services Committee is holding a confirmation hearing Thursday for three nominees: Gen. John Campbell as ISAF commander, Adm. Bill Gortney as chief of the U.S. Northern Command and Lt. Gen. Joseph Votel as head of the U.S. Special Operations Command. The House Armed Services panel has two hearings slated for Thursday on acquisition reform and Navy cruiser and destroyer modernization.

SPEED READ

— Passengers at some overseas airports with U.S.-bound flights will be required to power on their electronic devices in order to board, according to a new Transportation Security Administration directive. The Associated Press: http://bit.ly/1m78eTa

— Israeli officials arrest six Jewish suspects in the slaying of Mohammed Abu Khdeir, a 16-year-old Palestinian allegedly murdered in retaliation for the killing of three Israeli teenagers. The Washington Post: http://wapo.st/1q8gtha

— The Islamic militant group Hamas is vowing revenge after seven of its members were killed by an airstrike Monday that Israel said was conducted in response to rocket attacks from Gaza. The Associated Press: http://bit.ly/1odqkQ1

— Ukrainian President Petro Poroshenko tweets that his “order is now in effect — tighten the ring around the terrorists,” as Ukrainian forces seek to liberate regions in the eastern part of the country taken over by pro-Russian separatist forces. Reuters: http://goo.gl/NCFfxv

— Allegations of a 31-year-old U.S. spy working in Germany’s Federal Intelligence Service continue to chip away at relations between the two countries, with German President Joachim Gauck saying the situation is “really a gamble with friendship, with a close alliance.” The New York Times: http://nyti.ms/1mYlxkp

— Navy Master Chief Petty Officer Mike Stevens launches a pilot program as part of an initiative to issue tablets to sailors, who often lack adequate access to on-ship computers and quality Internet connections. Military Times: http://goo.gl/AoV9Xi

— Sixteen people were killed when a Russian-made Vietnamese military helicopter crashed near Hanoi on Monday. The Associated Press: http://bit.ly/1odrz1O

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Authors:

About The Author

Jeremy Herb is a defense reporter for POLITICO Pro. Prior to joining POLITICO, he covered defense and national security for The Hill, and covered the Minnesota congressional delegation and 2012 Republican presidential primary as a Washington correspondent for the Minneapolis Star Tribune.

Herb is a native of San Jose, Calif. He graduated with a bachelor’s degree from Santa Clara University and received a master’s degree from Columbia University’s Graduate School of Journalism.